U.S. June nonfarm payrolls only increased by 57k, far below expectations! Previous value cut by another 74k, Fed rate hike expectations plummet.

Is the shadow of the "hard landing" that Wall Street fears most emerging? The U.S. Bureau of Labor Statistics (BLS) released the latest June nonfarm payroll report today (2nd), with shocking data showing only 57k new jobs, half of market expectations, and the previous value was slashed by 74k. Although the unemployment rate edged down to 4.2%, this extremely weak report confirms the sharp slowdown in the labor market, putting the Federal Reserve (Fed), which had just turned hawkish yesterday, in a dilemma.

(Previous summary: U.S. job openings soared to 7.6 million in May, a two-year high! The job market is overheating, ignoring the U.S.-Iran conflict) (Background supplement: U.S. May ADP employment far exceeded expectations, surging by 122k! Fed rate cut expectations suffer another setback)

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• New employment plunges, previous values sharply revised down, employment momentum faces exhaustion
• Severe industry structure imbalance: Leisure and hospitality sector plunges by 61k
• New Fed chair faces test: Just turned hawkish, data immediately slaps back?

The U.S. labor market's runaway train is accelerating. Following the mediocre ADP "small nonfarm" data yesterday, the U.S. Bureau of Labor Statistics (BLS) officially released the June nonfarm payroll report (NFP) at 8:30 a.m. Eastern Time today (2nd). This key data, which affects the trend of global financial markets, is far weaker than all Wall Street economists had expected.

New employment plunges, previous values sharply revised down, employment momentum faces exhaustion

Data shows that the U.S. added only 57,000 nonfarm payroll jobs in both the private and government sectors in June. Compared to the average monthly increase of 36k over the previous 12 months, it seems similar, but it is far from the market's general expectation of 110k to 120k, indicating a significant slowdown in growth momentum.

To make matters worse, the BLS simultaneously made a "big squeeze" revision to the previous boom data: April's new jobs were revised down from the original estimate of +179,000 to +148,000 (a decrease of 31,000); May was revised down from +172,000 to +129,000 (a decrease of 43,000). These two months alone erased a total of 74k jobs, confirming doubts that previous economic data might have been "overstated."

| Core Economic Indicators | | --- | | June Actual Data | Market Expectations / Historical Change Explanation | | --- | --- | --- | | Nonfarm Payroll Change | +57,000 people | Far below market expectations of 110,000~120k; April and May previous values combined revised down by 74,000. | | Unemployment Rate | 4.2% | Down 0.1 percentage point from May's 4.3%, a small change (unemployed about 7.1 million). | | Average Hourly Earnings (YoY) | $37.64 (up 3.5% YoY) | Up $0.13 month-over-month (+0.3%); production and nonsupervisory employees hourly wage $32.38 (up 0.2% month-over-month). | | Labor Force Participation Rate | 61.5% | Down 0.3 percentage points month-over-month; employment-population ratio also fell 0.2% to 59.0%. |

Severe industry structure imbalance: Leisure and hospitality sector plunges by 61k

From the industry details, the warning of structural imbalance is further amplified. The main support for employment in June came from professional and business services (+36,000), social assistance (+25,000), and healthcare (+22,000). However, the leisure and hospitality sector, which was previously the main absorber of employment and a recovery indicator, actually plunged by 61,000 in June, reflecting extreme weakness in seasonal hiring and the chain effect of consumers cutting back on entertainment service spending under high price conditions.

New Fed chair faces test: Just turned hawkish, data immediately slaps back?

This chilling employment report undoubtedly hits the Federal Reserve (Fed) like a blunt blow. Just yesterday, newly appointed Fed Chair Kevin Warsh, who took office in May, made his international debut at the European Central Bank forum, where he firmly refused to give the market "forward guidance" on a July rate cut and warned that U.S. prices and inflation were still "too high."

However, just one day later, the cliff-like decline in the official nonfarm report shows that the real damage of the high-interest-rate environment to the real economy is expanding. Although the 3.5% YoY and 0.3% MoM increase in hourly wages in June indicate that wage inflation remains sticky, the decline in the labor force participation rate and the freezing of employment have prompted Wall Street analysts to adjust their models. The market generally expects that this report will force Fed officials to abandon their stubborn hawkish stance at the upcoming FOMC meeting, compromise with the market, and even begin a substantial rate-cutting cycle.